4. Basil and celery leaves are substitutes in making noodle soups. A rare drought destroyed a good portion of local celery supply, ceteris paribus, we have A. the price of both celery and basil will increase. B. the price of both celery and basil will fall. C. the price of celery will increase, and the price of basil will fall. D. the price of celery will fall, and the price of basil will increase.

Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter4: The Market Forces Of Supply And Demand
Section: Chapter Questions
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4. Basil and celery leaves are substitutes in making noodle soups. A rare drought destroyed a
good portion of local celery supply, ceteris paribus, we have
A. the price of both celery and basil will increase.
B. the price of both celery and basil will fall.
C. the price of celery will increase, and the price of basil will fall.
D. the price of celery will fall, and the price of basil will increase.
5. When the nominal price of unleaded gasoline increases, the real cost of buying gasoline
A. the real cost of buying gasoline must increase.
B. must decrease because income increases over time.
C. the real cost of buying gasoline remains unchanged.
D. might higher, lower or unchanged depending on changes in income.
E. might be higher, lower or unchanged depending on changes in CPI.
Transcribed Image Text:4. Basil and celery leaves are substitutes in making noodle soups. A rare drought destroyed a good portion of local celery supply, ceteris paribus, we have A. the price of both celery and basil will increase. B. the price of both celery and basil will fall. C. the price of celery will increase, and the price of basil will fall. D. the price of celery will fall, and the price of basil will increase. 5. When the nominal price of unleaded gasoline increases, the real cost of buying gasoline A. the real cost of buying gasoline must increase. B. must decrease because income increases over time. C. the real cost of buying gasoline remains unchanged. D. might higher, lower or unchanged depending on changes in income. E. might be higher, lower or unchanged depending on changes in CPI.
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